A Short Call Option is a position in which a trader/investor Sells or “Sells to Open” a Call Option Contract thereby promising to sell the underlying asset or security at the pre-determined “Strike Price” on or before the pre-determined date “Expiration Date” in exchange for receiving the premium.
The term “going short” refers to opening a position by selling a security (not buying one), and applies to any tradable instrument that a trader/investor ”sells to open” including call options.
A trader/investor would sell “Short Calls” in anticipation of the price of the underlying asset falling in value, or staying range bound, or simply to get paid to sell the asset at a desired price.
Short calls are often sold to receive the premium and thereby get paid to sell the security in advance. A covered call involves owning the underlying and selling a short call.
